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| financial_advice [2008/09/15 21:29] – external edit 127.0.0.1 | financial_advice [2013/05/06 06:17] (current) – [Bottom line advice] james_mcbride |
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| ====Learn more==== | ====Learn more==== |
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| * Read [[http://en.wikipedia.org/wiki/Burton_Malkiel|Burton G. Malkiel]]'s 1973 classic //[[http://www2.wwnorton.com/catalog/fall06/006245.htm|A Random Walk Down Wall Street]]// for a thorough explanation of the [[financial_advice:glossary#Efficient Market Hypothesis (EMH)|Efficient Market Hypothesis]] (or why it's so hard to beat the market) and how to invest wisely. It's often called the first book any investor should read on investing. There's also an advice-only version //[[http://www2.wwnorton.com/catalog/fall04/032639.htm|The Random Walk Guide to Investing]]//, without all of the academic analysis. | * Read [[http://en.wikipedia.org/wiki/Burton_Malkiel|Burton G. Malkiel]]'s 1973 classic //[[http://www2.wwnorton.com/catalog/fall06/006245.htm|A Random Walk Down Wall Street]]// for a thorough explanation of the [[financial_advice:glossary#Efficient Market Hypothesis (EMH)|Efficient Market Hypothesis]] (or why it's so hard to beat the market) and how to invest wisely. It's often called the first book any investor should read on investing. There's also an advice-only version, //[[http://www2.wwnorton.com/catalog/fall04/032639.htm|The Random Walk Guide to Investing]]//, without all of the academic analysis. |
| | * [[http://money.stackexchange.com]] is a Q&A site with some good information. |
| * [[http://finance.yahoo.com/columnist/archives/headline/futureinvest/2006/1|Jeremy Siegel]] and [[http://finance.yahoo.com/columnist/archives/headline/millionaire/2005|David Bach]] have some [[http://finance.yahoo.com/columnist/allbios|columns]] which can be instructive. | * [[http://finance.yahoo.com/columnist/archives/headline/futureinvest/2006/1|Jeremy Siegel]] and [[http://finance.yahoo.com/columnist/archives/headline/millionaire/2005|David Bach]] have some [[http://finance.yahoo.com/columnist/allbios|columns]] which can be instructive. |
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| * Learn about [[http://en.wikipedia.org/wiki/Benjamin_Graham|Benjamin Graham]], [[http://en.wikipedia.org/wiki/Warren_Buffett|Warren Buffett]] and [[http://en.wikipedia.org/wiki/Berkshire_Hathaway|Berkshire Hathaway]], the paragons of active, low-risk, high-return, "value" investing. | * Learn about [[http://en.wikipedia.org/wiki/Benjamin_Graham|Benjamin Graham]], [[http://en.wikipedia.org/wiki/Warren_Buffett|Warren Buffett]] and [[http://en.wikipedia.org/wiki/Berkshire_Hathaway|Berkshire Hathaway]], the paragons of active, low-risk, high-return, "value" investing. |
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| * [[http://www.morningstar.com|MorningStar]] is the gold standard for analysis of mutual funds, and has a handy, free web interface for keeping track of your investments. Just don't take their star system too seriously. | * [[http://www.morningstar.com|MorningStar]] is the gold standard for analysis of mutual funds, and has a handy, free web interface for keeping track of your investments. Just don't take their star system too seriously. |
| | * [[http://www.fool.com|Fool.com]] is all about trying to beat the market (which is, in fact, a foolish strategy). |
| * [[http://www.fool.com|Fool.com]] is all about trying to beat the market. | |
| * [[http://www.fairmark.com/rothira/toc-roth.htm|Roth IRAs]] can get kind of complicated. | * [[http://www.fairmark.com/rothira/toc-roth.htm|Roth IRAs]] can get kind of complicated. |
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| ====Bottom line advice==== | ====Bottom line advice==== |
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| Right now: | Right now: |
| * Pay off your credit card bills. If possible, make this your most important financial priority after school, food and shelter. | * Pay off your credit card bills. If possible, make this your most important financial priority after school, food and shelter. |
| * Open a [[http://www.bankrate.com/brm/rate/mmmf_highratehome.asp?params=US,416&product=33&sort=2|high yield internet bank account]] and keep spare cash there. | * Open a [[http://www.bankrate.com/brm/rate/mmmf_highratehome.asp?params=US,416&product=33&sort=2|high yield internet bank account]] and keep spare cash there. |
| * Open a Roth IRA mutual fund at T. Rowe Price (start with [[http://www.troweprice.com/common/indexFundFacts/0,0,ticker=74149P762,00.html?rfpgid=7155&ddown=Fund_by_Name&scn=Find_a_Fund|Retirement 2045]]) and set up automatic, monthly contributions of at least $50. Aim for maxing out your IRA, if you can afford it, at $333/mo. | * Open a Roth IRA mutual fund. A simple thing to do is invest in a target retirement fund, something offered by most investment management companies. Assets in these funds are invested according to how close you are to retirement (higher risk, higher reward if you are retiring in the distant future, and then safer, lower return investments as you near retirement). In choosing where to open an account, pay particular attention to how much the investment company charges for managing the investment. In addition to the obvious thing like fees for having an account, look for the expense ratio of any mutual funds, which is the percentage of your investment that the company takes each year for managing the fund. Vanguard offers target funds with a 0.18% expense ratio, compared to an industry average closer to 1% ([[https://personal.vanguard.com/us/funds/snapshot?FundId=0699&FundIntExt=INT|Vanguard 2050 Target Retirement]]). |
| * If you've worked here for a summer already, [[https://login.fidelity.com/ftgw/Fidelity/NBPart/Login/Next|move your DCP savings]] into something like the Spartan S&P 500 [[http://badgrads.berkeley.edu/doku.php?id=financial_advice:glossary#index_fund|index funds]], where it can start to grow for you. | * If you've worked here for a summer already, [[https://login.fidelity.com/ftgw/Fidelity/NBPart/Login/Next|move your DCP savings]] into something like the Spartan S&P 500 [[http://badgrads.berkeley.edu/doku.php?id=financial_advice:glossary#index_fund|index funds]], where it can start to grow for you. |
| [[https://personal.vanguard.com/us/VanguardViewsArticle?ArticleJSP=/freshness/News_and_Views/news_ALL_chaircorner2Q06_07132006_ALL.jsp|Longer term]]: | |
| *Live below your means | Longer term: |
| *Participate in the markets | * Live below your means |
| *Invest regularly | * Participate in the markets |
| *Get knowledgeable | * Invest regularly |
| | * Get knowledgeable |
